As terrorists use credit fraud to finance their plots and lenders' losses mount, fresh attempts are made to target

The timing couldn't have been worse. When Jeremy Johnson discovered that someone had applied for a couple of credit cards in his name and had run up a $6,000 tab, it was late September and law-enforcement agencies were busy tracking down terrorists. Johnson, 31, a production assistant at a cable-channel website, called his local precinct in Brooklyn and was told the N.Y.P.D. was so swamped, the detectives couldn't do anything unless he had the perpetrator's name and address.

Johnson knew that identity theft violates both state and federal laws, so he called the FBI and was forwarded to the Secret Service,...